What’s better, high renter mobility or low displacement? Let me explain.
A landlord recently posted on X that an 85-year-old in his rent-stabilized walk-up can no longer navigate the stairs, but cannot give up her low rent. She will never leave her apartment again.
Three years ago, a friend of mine — a public school teacher — moved with his wife and two kids from Fort Greene to Bedford-Stuyvesant because the landlord raised their discounted pandemic rent by 30 percent. The median rent for a three-bedroom in Fort Greene is now $6,500, according to StreetEasy.
There are countless anecdotes like these. When elected officials hear about such problems, they write bills to fix them. When all you have is a hammer, everything looks like a nail.
But as the Manhattan Institute’s Michael Hendrix wrote, “The problem with rent control is that it addresses a problem rooted in regulations with more regulations. Housing cannot become more affordable without becoming more available.”
By “a problem rooted in regulations,” he meant rules that limit housing supply — and renter mobility. American renters move a lot less often than they used to, even controlling for the fact that their average age has risen and other factors. It’s a sign of increasing sclerosis in the nation’s housing market.
Supporters of rent control and good cause eviction say those policies allow people to remain in their homes, reducing moves that can be expensive for adults and disruptive for children.
Critics say these policies cause ultra-low vacancy rates, trap people in their rentals and make it hard to move to better neighborhoods, better jobs or more appropriately sized apartments.
This creates pockets of high unemployment where people can’t leave and pockets of high employment where people can’t move in. It hampers the entire economy.
Both sides are right. For any policy, the question is whether the benefits outweigh the drawbacks. In New York City, I see a lot of drawbacks.
In 2023, only 0.98 percent of rent-stabilized units were vacant (excluding empty units not available for rent) and 13.1 percent were overcrowded.
For market-rate apartments, 1.84 percent were vacant and 6.7 percent were overcrowded. Better, but still bad.
Housing economists say a healthy housing market has a vacancy rate between 5 percent and 10 percent. Allow developers to build, as Sarasota, Austin and Minneapolis did, and rents will come down or rise more slowly. As a bonus, renter mobility will increase and displacement will decrease, as tenants will have more leverage and housing options.
What we’re thinking about: After California passed a landmark bill rolling back CEQA, an environmental protection law that has stymied housing production for decades, do you think New York will do the same for its counterpart, SEQRA? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Although “abundance” has gained traction as a housing affordability solution among progressives, New York politicians have whittled the Brooklyn Marine Terminal redevelopment plan from 12,000 homes down to 7,700 and now to 6,000, in part to preserve industrial jobs. They have also decided that 40 percent of the apartments will be affordable to households earning just 60 percent of the area median income — prioritizing regulation over volume as an affordability strategy.
Elsewhere…
A kitchen cabinet maker, for some reason, did an analysis to determine which cities aren’t worth the cost of living. Based on Highland Cabinetry’s formula, Newark topped the list.
New York City was second. “It’s the priciest city for real estate at $18,402 per square foot in the city center, but the residents struggle with traffic, noise, and a safety index under 50,” the study found. (Obviously, most New Yorkers do not live in the “city center.”)
New York’s safety score was actually the best among the 10 cities on the not-worth-it list. New York also had the best traffic score, while Los Angeles had the worst by a lot. Miami was far worse than the other cities on pollution, but had the lowest unemployment rate.
Detroit had a poor safety score but the cheapest real estate of the 10 “worst” cities. Chicago had the highest unemployment rate, 5.3 percent.
There was no score in the analysis for “chances of meeting a highly educated, upwardly mobile future spouse,” which would have helped New York quite a bit.
Closing time
Residential: The top residential deal recorded Tuesday was $12 million for a 4,749-square-foot co-op unit at 14 East 90th Street on the Upper East Side.
Commercial: The top commercial deal recorded was $9 million for 544-546 Union Street and 548-550 Union Street, which total 11,508 square feet. The development site is in Gowanus.
New to the Market: The highest price for a residential property hitting the market was $13 million for a 3,750-square-foot co-op unit at 888 Park Avenue on the Upper East Side. Adam Modlin and Andrew Nierenberg of the Modlin Group have the listing.
Breaking Ground: The largest new building application filed was for a proposed 55,639-square-foot, 99-unit project at 2484 Elm Place in Fordham. Leandro Dickson filed the permit on behalf of Steven Westreich of Westbridge Realty Group.
— Matthew Elo